The costs associated with acquiring a new customer are five to six times what it takes to generate an equal amount of new business from an existing customer. If that’s not a compelling enough reason to think about and invest more in customer loyalty programs, five percent improvement in customer retention can yield 25 percent to 100 percent increase in profit.
But how do you create an effective customer loyalty strategy? Here are several innovative ways to keep customers coming back for more:
The root of most every loyalty program is to make the customer feel special. “Today’s customers want loyalty programs to be ‘about me’ — individual, relevant, meaningful, etc.,” writes Loyalty 360. Personally relevant deals are the second most frequently chosen reason for brand loyalty, according to Ipsos Mori and The Logic Group. Brands can leverage deal sites, like Groupon, to deliver personalized coupons relevant to users and increase brand loyalty.
Converting Loyalty Into Store Cash
Sometimes reward programs can be convoluted with different tiers that have different rewards. Unfortunately customers likely don’t spend as much time thinking about your rewards program as you do. Therefore, make it as simple as possible. For instance, Esprit.com mails a $5 voucher for every $125 you spend online or in-store. And a personal favorite is Borders and Seattle’s Best. Borders offers a free beverage of your choosing (yes, it can be a $5 pumpkin, vanilla, latte) for every five drinks purchased. Making the loyalty program as clear as possible will avoid confusion while staying top-of-mind when the customer has a choice between you and a competitor.
Reminding the Customer of Your Existence
No, reminding a customer of your existence is not necessarily about spamming their inbox or overloading their mailbox with junk. If, for instance, you offer a product that requires refills or must at some point be replenished, help the customer make the decision to have the product shipped at regular intervals. For instance, Amazon will ask customers purchasing Bayer if they would like the product shipped every month, two months, and so on. This subscription approach reminds the customer of the convenience and value of the brand.
Increasing Brand Engagement Through Social Cause
A lot of loyalty programs assume the shopper is already a customer. Not true in some cases. The ideal loyalty program can begin even before the customer has become a customer. Target, for instance, enticed its Facebook fans to vote on charities for which the company donated $10 million. Although the initiative was an “alternative” form of a loyalty program, the brand sought to boost its relationships with its social media audience, who then, in turn, would shop at the store.
A Synergistic Shopping Experience
Strategic partnerships can lead to fun and innovative loyalty programs. For instance, if you spend $X at the grocery store, you can get your groceries delivered to your house without a charge. How is this possible? The grocery store would partner with a local distributor to develop a loyalty program — both companies working together to increase the overall value for loyal customers.